10 Benefits of Living on Rent

First let me thank you all for amazing response to my previous weeks article on Real Estate, if you have not checked it yet. Click here

With various discussion which took place with people from different walks of life, some common thread emerged which I would like to highlight.

Once you own a piece of Real Estate you tend to look at it differently, it has some sort of emotional connect, there are biases which creep in, the most common bias is the ownership bias. Once you own it, you are not able to make decision which are favorable for your well being. You tend to give more importance to the piece of real estate and its use rather than ease of life.

mumbai-aerial-view

Benefits of Living on Rent:-

1. Flexibility of Location

When you live on Rent you are not confined to a particular location. You can move about freely. This helps when you are still uncertain on where you will be heading in your life and are keen on taking different opportunities irrespective of location.

2. Doesn’t influence any decision

When you own a piece of Real estate any decision which requires to move location is hard one to make.
We always give more importance to the Real Estate as we have invested a lot both money and time. It chains you down emotionally. You think irrationally.
Even if you decide to relocate there are lot of things to be taken care of, if its permanent relocation you would like to sell. What if the markets are depressed. I can write a full article on this topic, hope the point came across.

When you live on Rent taking a decision to move to an other city or country is more easy.
You are able to think rationally on the opportunity at hand and are not biased w.r.t your rental property.

3. Spend less time and money on daily commute

In all the major city’s of the world commuting has become nightmare due to ever increasing traffic and over burdened public transport.
In city like Mumbai and Bangalore if you travel by road to office which is 10 to 20 Km it would mean you are giving up on 2-4 Hrs of your daily life to commuting.
Now just imagine how much money and time you can save if you start living in rented place near office where commuting can be done via walk or cycling.
The time saved can be invested in improving your skills and work on side hustle.

I have colleague who thinks if he moves on rent close to office he will save 3 Hrs daily and close to 25% of rent as part of traveling cost.
Knowing the above also is not helping him move out, cos his decision making ability is chained by the apartment he owns.

4. Live-in Relationship with your home

Suppose you are new to a locality and not sure if you will like to live here for the good many years of your life.
Why not try out living on rent, check the neighborhood out.
Also our priorities change with time, requirements of home would be different for bachelors, married couples and couples with Kid and when you retire.
I would suggest you should try different options as couple and think of buying only when your child is about to go to school. Child’s school is also an important criteria in selecting where you should locate. If you can delay buying it further better.

5. You get to stay in New apartments every few years

When we live on rent every 3-4 years we can move to a brand new apartment and that way always have new place to stay in.
This way you can reset the rent as well. Usually when new apartments are available on rent in huge complexes the supply is more so you can get a bargain as well.
It also means you get to use the latest amenities on offer.

6. On achieving Financial Independence will you be living in your current location ?

When you achieve Financial Independence you will be free to locate anywhere in the world, would you be living in a crowded city?
This will depend on individual choice, given a choice I would not like to stay in city, I would go for mountains or beach.
You need to think about your purpose, what will you do on achieving Financial Independence. It revolves around our purpose.

7. Liquidity

When you are on rent, as I stated in my previous article there is more liquid cash available.
We can invest the surplus and target to save decent money for our financial independence.

There were few concerns raised that in case of Job loss it would be better to have own home.
My argument is in case you are in rented home, you have ample liquidity to go over the bad time, in case of own home on Mortgage the monthly outgo will be more.
You can sustain longer on rented and if need be can move to smaller unit or in location where it is less expensive.

8. No Maintenance and Repairs

Unless you break anything, you don’t need to carry out any maintenance or repair work on a rented property.

9. Helps you Save more in your Initial years

When you stay on Rent there is limited upfront costs, at max you have to pay small deposit amount.
This helps you save the difference between EMI and Rent.
As this money is saved early in your career it has long time to compound and hopefully you can get early financial independence.

10. Tax Saving

Tax saving is also available to people living on rent and not just who own the property.

 

Thanks for Reading. Share your thoughts.

Please share with others if you liked it, using the social media buttons on top.

 

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2 thoughts on “10 Benefits of Living on Rent

  1. Amazing piece sir ji. Very rightly emphaiszed RE is not a boon if we paying EMIs for it. I strongly feel people lack conviction in equities/mf to sell EMI eating RE or may be at times they are too much emotionally attached to it. Eventually, whatever may be the reason, Cost of EMIs will definitely delay FIRE.

    Liked by 1 person

  2. Point 7.. it’s just not initial savings..imagine nothing saved for 8-10 years because of home loan in a total saving journey of 30 years.. you perhaps missed the most crucial year of compounding …almost 30 % of wealth creation purely because u wanted to buy home

    Another point … You don’t make choices when you pay emi.. you just perhaps take a holiday with heavy heart considering should I pay faster or living life is important too.. ten years delay in buying home can make substantial difference ..15 years even more..

    Like

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